Decided on February 14,1991



K.Sankararaman, - (1.) THE Collector of Central Excise, Patna has filed this Reference Application under Section 35G(1) of the Central Excises and Salt Act, 1944 for referring the following points of law to the Honourable Patna High Court (Ranchi Bench) :- (1) Whether provision of limitation as prescribed under Section 11A of the Central Excises and Salt Act, 1944 which relates to demand of duty not levied, not paid, short levied, short paid or refund erroneously granted and does not relate to credit of duty can be engrafted in Rule 57-1 of the Central Excise Rules, 1944 for disallowing credit and whether Section 11A will override Rule 57-1. (2) Whether the Tribunal can suo motu decide the issue of validity of demand on limitation ground which was not subject matter of appeal before the Tribunal - more so whether urged/agitated before the original authority or in first appeal nor even in hearing before the Tribunal.
(2.) The points arise from the Tribunal's order No. 141/Cal/1990-141 dated 30-3-1990 on the appeal filed by the Collector as against the Order-in-Appeal No. 306/Pat/88 dated 31-10-1988. It was held by this Tribunal in the said order while accepting his plea in the appeal that P. B. Wire Mesh and Industrial Cloth are not eligible for the benefit of modvat credit under Rule 57A of the Central Excise Rules, 1944 that while working out the demand for the amount of credit, the Assistant Collector should work out the amount of demand arising from wrong availment of credit to a period of six months from the serving of the demand, as per the provisions of Section 11A of the Central Excises and Salt Act, 1944. The matter was argued on behalf of the applicant by Shri M. N. Biswas, learned Senior Departmental Representative. He referred to the points raised in the application that recovery of credit wrongly availed is separately and specifically provided for under Rule 57-1 which was distinct from Section 11A which related to recovery of duty short levied or short paid. At the material time there was no time limit restriction in Rule 57-1. He, therefore, pleaded that time limit criteria will not apply to proceedings taken in terms of Rule 57-1. He cited the judgment of the Honourable Gujarat High Court in Torrent Laboratories v. Union of India, reported in 1991 (55) ELT 25 (Guj.). [This has now been reported in 1991 (32) ECR 381 also], which he submitted supports this view. He, therefore, pleaded that the points of law stated in the application may be referred to the Honourable High Court of Patna for a ruling.
(3.) THE points raised by Shri Biswas were stoutly opposed by Shri P. K. Das, learned Counsel for the respondents, M/s. Ashim Paper Products. He pointed out that the Department itself had taken the decision following South Zone Tariff Conference that Section 11A would govern Rule 57-1. He referred to the judgment of the Honourable Supreme Court in the case of J.K. Spinning & Weaving Mills Ltd. v. Union of India, reported in 1987 (32) ELT 234 (SC) wherein it had been held that Section 51 of the Finance Act, 1982 did not override the provisions of Section 11A and that in the absence of any specific provision overriding that section it will be consistent with rules of harmonious construction to hold that Section 51 of the Finance Act, 1982 in so far as it gave retrospective effect to the amendments made in Rules 9 and 49 of the Rules was subjected to the provision of Section 11A. He submitted that the said decision of the Supreme Court as well as the Department's own revised stand in the matter that Section 11A will govern Rule 57-1 had not been properly placed before the Honourable Gujarat High Court in the Torrent Laboratories matter. He also referred to the decision of the South Regional Bench reported in 1988 (33) ELT 448 (Tri.) in the case of Friztain Corporation v. Collector of Central Excise wherein they rejected a Reference Application whether Section 11A would govern Rule 56A on .the ground that the issue had already been well settled by decisions of Bombay High Court and Andhra Pradesh High Court that the said Section would govern the said Rule.;

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.